Third quarter results substantially exceed expectations due to increased demand for residential products
Generac Holdings Inc., announced that it expects strong financial results for the third quarter of 2012, and as a result is raising its outlook for full-year 2012.
During the third quarter of 2012, the company has experienced increased demand for home standby and portable generators as a result of the recent major power outage events, as well as expanded marketing and sales initiatives to increase home standby penetration. As a result of the increased demand, net sales during the third quarter of 2012 are expected to be in the range of $295 to $300 million. Net income is expected to be between $21.5 and $25 million, with diluted net income per common share of $0.31 to $0.36. Adjusted net income is expected to be between $49.5 and $53 million, with adjusted diluted net income per common share of $0.72 to $0.77. Adjusted EBITDA is expected to be in the range of $72 to $75 million.
Due to this outperformance for residential product sales, full-year 2012 total net sales are now expected to increase in the low-30% range over the prior year, which represents an increase from the low-20% range growth rate previously expected. As a result of this higher sales outlook, adjusted EBITDA for the full-year 2012 is now expected to increase in the mid-30% range over the prior year, which is an increase from the mid-teens growth rate previously expected. Diluted net income per common share for 2012 is expected to be in the range of $1.02 to $1.08, with adjusted diluted net income per common share of $2.65 to $2.70. This updated guidance continues to assume no material changes in the macroeconomic environment, as well as no additional major power outage events during the remainder of 2012.
Aaron Jagdfeld, president and CEO, said, “We initiated our Powering Ahead strategic plan in 2010 that focused on growing the residential standby market, increasing our share of the commercial and industrial market, diversifying our demand, and expanding into new geographies.”
Since implementing the Powering Ahead plan in 2010, Generac’s net sales in 2011 increased 34% compared to 2010 and are projected to increase in the low-30% range for 2012 compared to 2011. This revenue growth represents an acceleration relative to Generac’s 10-year annual sales growth rate of approximately 21% projected through 2012. Likewise, adjusted EBITDA in 2011 increased 21% compared to 2010 and is projected to increase in the mid-30% range for 2012 compared to 2011. During 2011, the company generated $182 million of unlevered free cash flow, and is expected to generate approximately $200 million of unlevered free cash flow in 2012. This strong cash flow generation has allowed the company to fund all of its internal growth initiatives and execute on other key elements of its financial policy including debt paydown and making acquisitions.
Generac expects to release its full third-quarter financial results before the market opens on Wednesday, Oct. 31, 2012, and management will hold its customary call that morning to discuss further details on financial results for third quarter and the outlook for full-year 2012. The company will also be hosting an Investor Day on Nov. 8, 2012.